Correction: In a previous version of this article, the headline misstated the metric that was down. The headline has been updated to reflect that 2U's revenue was down 6% from the prior year.
Dive Brief:
- 2U, a leader in the education technology sector, reported $238.5 million in revenue for the first quarter of 2023, a 6% drop from the $253.3 million it made a year prior, according to a company press release Wednesday.
- The company's services as an online program manager, or OPM, took a bigger hit. Revenue for its degree program segment decreased by $13.7 million, a 9% loss from where it stood Q1 2022. 2U attributed the loss to an 11% enrollment decline in full course equivalents. Revenue from the alternative credentials held steadier, decreasing by just 1%.
- 2U's first quarter also saw a significant reduction in spending following dramatic cost-cutting measures. The company's costs and expenses totalled $258.7 million, down 29% from $364.7 million in the first quarter of 2022.
Dive Insight:
2U expects to finish fiscal year 2023 with somewhere between $157 million to $163 million in adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA.
"We're thrilled to report that we achieved positive adjusted free cash flow for the first time in our history, delivering a 146% increase in adjusted EBITDA," Chip Paucek, the company's co-founder and CEO, said in a statement. "We generated three million new learner prospects and our enterprise channel grew 57%."
2U also touted new additions to its alternative credential line-up.
MicroBootCamps, stackable credentials in desirable technical fields, will offer learners and companies on-demand courses that can be customized, according to the press release. And Try It Courses will offer students free introductory courses.
The company previously shared its intention to draw customers in through its free offerings and then transition them to paid programming.
